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The Navy is advancing a plan to temporarily lay-up half of its cruisers, freeing crews to plus-up other hulls and dollars to build new ships and subs, according to a budget outlined Monday by Defense Secretary Chuck Hagel.

The plan would place 11 cruisers in a “reduced operating status” until they receive their modernization, which upgrades their combat systems and extends their service life.

“This approach enables us over the long-term to sustain and modernize our fleet of cruisers, which are the most capable ships for controlling the air defense of a carrier strike group,” Hagel said at the Pentagon briefing.

The fiscal 2015 budget preview revealed the Navy will be spared the heavy end-strength and force-structure cuts facing the other services. And it will keep a carrier force of 11 flattops, after some discussions of cutting that by up to three carriers.

Still, Hagel warned that the aircraft carrier George Washington could be decommissioned later should Congress leave sequestration cuts in place for fiscal 2016. Hagel said the final decision will be made in the next budget on whether to decom the GW before its planned nuclear refueling and overhaul, also warning that sequestration could imperil 10 “large surface combatant ships” by 2023.

Hagel said the budget will continue building two destroyers and two Virginia-class attack submarines per year, as well as one afloat forward staging base, as part of a plan that will boost the fleet’s size over the next five years.

Hagel also signaled dissatisfaction with the littoral combat ship, an agile, shallow-draft ship that has been a top priority for Navy Secretary Ray Mabus and surface Navy leaders.

“We need to closely examine whether the LCS has the protection and firepower to survive against a more advanced military adversary and emerging new technologies, especially in the Asia Pacific,” Hagel said. “If we were to build out the LCS program to 52 ships, as previously planned, it would represent one-sixth of our future 300-ship Navy.”

Hagel said there would be no contract negotiations for more than 32 LCS vessels and also called on the Navy to develop a more heavily armored alternative, similar to a frigate.

“Additionally, at my direction, the Navy will submit alternative proposals to procure a capable and lethal small surface combatant, consistent with the capabilities of a frigate,” Hagel said.